Share This Blog

Is it too late?

Roughly a third of Baby Boomers have saved less than $25,000 while just over a fifth of all American have no savings at all, according to a study by Northwestern Mutual.

So, is it too late? Some experts say no, not even if you are in your fifties. Let’s hope they are right.

Should we simply give up on the idea Americans can be prudent and plan for their own financial future and instead raise payroll taxes so social security becomes the primary retirement income source at 60% of more replacement of pre-retirement income?

Would Americans rather pay higher taxes (or have someone else pay higher taxes) than plan for their own retirement?

Post navigation

Government needs to correct the unfair income tax on Social Security benefits – the 1983 50% tax based on 1983 income levels and the 1993 additional tax totaling 85% still based on those same 1983 income levels that have NEVER BEEN INDEXED FOR INFLATION.

Draconian IRA RMD rules also need to be corrected. Both Trump and Congress have recently addressed that subject. But so far, nothing has been done.

I do believe that the FICA taxes need to be raised and no yearly limit on it. It is a tax that is already there. Medicare and Social Security needs to be kept up. it isn’t 100% of our retirement but it helps to supplement it. If you have paid it all your life; then you paid it in good faith that it would be an insurance plan for your retirement. And all the money that Congress took out over the years since 1965 should be repaid. What does founding and funding the Peace Corp have to do with Seniors retiring. That took a bundle out.

I think we have discussed this before, Congress did not take any money from SS. The Trust purchased US treasury bonds. Those bonds pay the trust interest. $88 billion a year. Benefits today are being paid using incoming taxes, income taxes on SS benefits, the interest AND redemption of those bonds which will be fully redeemed and used by 2034.

I think there are too many competing government policies against saving and Wall Street and Madison Avenue do not help.

The government needs you to buy houses you can’t afford to drive the economy. The government’s education policy is that everybody must go to college no matter the cost when it should be everybody should have an opportunity to go to college. The IRS taxes interest as ordinary income when the least they could do is to tax it as an investment like capital gains.

Madison Avenue advertising makes you like bad if you are not buy things, encouraging you to spend your money. Run up your credit card.

Wall Street cannot be trusted in the eyes of many people from the banking crisis. There are banks that are still paying 0.01% on savings accounts. With just a little effort you can find banks online that pay 1% to 2.25% for normal savings accounts. It is not like 25 years ago where it was a little harder to research bank rates and much hard to open accounts by mail. It’s all online. The same is now true for online IRAs with low fees. You can avoid a broker if you want.

Then there are the politicians buying votes. 60% income replacement will become 100% or 125% income replacement. The politicians want you to become their dependents to ensure their votes. They want a welfare state.

It the end, since the population as a whole gets no to little financial training, and it is too easy to just put off thinking about retirement, it doesn’t matter ir it 40% or 60%. People will still not do the basic things like paying of debt before retiring.